Retirees risk losing $27m in Wickham collapse

More than 300 self-funded retirees are at risk of losing up to $27 million after investing in a high-risk Banksia Securities-type investment.

Brisbane’s Wickham Securities – a mortgage finance lender providing funds for borrowers buying or refinancing commercial property – has appointed administrators after its loan book went bad.

A creditors’ meeting has been scheduled for February 6 to decide the fate of the company and the administrator said it was preparing a report to the corporate regulator as it investigated incomplete records.

“The business was raising money from the public, paying them returns and lending money on at a higher rate," PPB administrator Grant Sparks told The Australian Financial Review. “You do the maths: if someone is going to borrow money at 20, 25 per cent when the banks are charging 6.5, there is a greater level of risk.

“Wickham Securities lent money predominantly to the property and development industry and if you are giving your investors 9 and 10 per cent as a return, you have got to lend your money out at a higher rate and it was usually property developers who could justify that higher rate," he said.

“There are certainly some loans in their that are bad."

One profile of the business based in Wickham Terrace, Spring Hill boasted the firm could provide “fast turn-around times, with the capacity to progress from approval to documentation and settlement within 48 hours", and employed more than 50 staff.

The administrator agreed it was fair to compare Wickham’s business model with that of financial services firm Banksia Securities, which collapsed last October owing 16,000 investors $650 million.

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The collapse of Banksia, which sold debentures and invested the funds in property, has triggered government proposals for minimum capital and liquidity standards for the industry which are yet to be introduced.

The Australian Securities and Investments Commission said it was working closely with the administrators and had announced a taskforce to regulate the $4.5 billion unlisted debenture industry more closely.

Mr Sparks said he was preparing a report to ASIC noting “some things which we have come across which are inconsistent".

“We have had discussions with ASIC because of the public being involved through the prospectus and money raising . . . our investigations into what has happened have started but certainly not finished," he said.

“Company records haven’t been kept up to date, so the status of those loans is unclear, and until we know that, we really don’t know what we will be able to recover."

Wickham Securities – run by Brisbane financial adviser Brad Thomas Sherwin and Peter John Siemons – issued notes through Bendigo and Adelaide Bank’s Sandhurst Trustees by way of a public prospectus that drew in the $27 million from about 300 investors.

“A lot of the noteholders are super funds," Mr Sparks confirmed.

The administrator said that a third director, Garth Robertson, claims to have resigned before administrators were appointed. The three men and Sandhurst Trustees could not be reached for comment.